Managing your investments is a crucial part of your retirement planning strategy. Failing to invest your contributions would mean missed opportunities for growth. Choosing the wrong mix of investments can result in insufficient growth, or too much risk that can lead to significant market losses. The following are some points for consideration.Defined-Benefit Plan Funds AssetsIf you are covered under a defined-benefit pension plan, your employer is responsible for managing your investments under the plan. You are required to receive a pre-determined pension amount from your defined-benefit pension balance, based on the number of years that you work for the employer, and your salary over the years during which you were eligible to receive benefits under the plan.

Defined Contribution PlansYour employer has the option of managing your investment themselves, or allowing self-direction of investments by employees. If your employer manages your investments, choosing the types and mix of investments is out of your control. On the other hand, if you employer allows employees to self-direct their investments, you would be responsible for selecting the assets in which your contributions are invested and that the amounts allocated to each investment vehicle is suitable for your investment profile. In some cases, your employer may limit your options to a pre-selected list of assets. In others, you may be allowed to choose from any assets that can be held in a retirement account.

SIMPLE, SEP, Traditional and Roth IRAsWith IRAs, you are responsible for directing your investments, and your options usually depend on the financial institution with which your IRA is held.

If your IRA is held at a bank or credit union, your options may be limited to money market accounts and certificate of deposits. These are some of the safest type of investments as there is little (if any) risk of losing your capital. However, the rate of returns on these amounts over long-term periods is usually lower than the rate of returns available on other assets such as mutual funds, bonds and stocks.

If your IRA is held with a mutual fund company, your investments are usually limited to the mutual funds available through that company. If your IRA is held with a brokerage firm, including the brokerage arm of a bank, you can usually choose any investments that can be held in retirement accounts.

Regular SavingsThe options available for these accounts depend on the type of financial institution with which they are held, similar to the options that apply to IRAs.

Diversify Your PortfolioWhen building your portfolio, it might be tempting to allocate the majority of your savings to assets that preserve your capital, especially if you have a very low risk tolerance. On the other hand, you might be tempted to invest heavily in assets that provide the opportunity for the highest returns. But neither of these options would be considered suitable; instead your portfolio should be designed to provide enough opportunity for growth while minimizing market risks. When designing your portfolio, financial advisors usually take factors into consideration such as:

Your age and the age by which you plan to retire. This helps to determine whether there is sufficient time to recover from any significant market losses.

Your risk tolerance and your level of experience with, or knowledge of, investments. This considers your level of tolerance for significant market losses or the risk of market losses. In some cases, it may be practical to disregard a low risk tolerance in order to provide a reasonable opportunity for growth. Someone who has extensive experience with investments is likely to have a higher risk tolerance than those who do not. The same may apply to someone who has a reasonable amount of knowledge about how investments work, including historical performance of investments.

Other savings. The portfolio design for one account usually takes investments in other accounts into consideration, so as to ensure an overall balance of the investment objectives for the individual. As such, your investment professional may need to know about other accounts and the asset allocation model used for those accounts.